Jio’s business case, at some level, needs the support of an industry size that is materially larger than what it is today. Jio has a reasonable business case in a market where the other incumbents Airtel, Vodafone and Idea – A-Vo-Id lobby has one.

Jio is well funded by its parent and its discounting model is hurting the A-Vo-Id Lobby and it can potentially drag the industry size down to such low levels in the near term that raising it to the needed for a reasonable business case levels within a reasonable time frame may become near impossible.

In the Worst Case a 60%+ yoy decline in India wireless EBITDA levels of the industry (ex-Jio) in FY2018 to under Rs 200 bn levels. For an industry sitting on Rs 4 tn+ of debt (including deferred spectrum obligations), these levels would not even be enough to service interest obligations. We wonder if Jio sees the natural ceiling on a specific player’s revenue potential posed by a natural ceiling on data volumes driven by (a) India’s income pyramid and (b) more importantly, by the 25% regulatory ceiling on the share of spectrum a player can have.

In other words, one can stretch the market share target to any number up to 100%. This then reduces the market size requirement for me (to have a robust business case) in turn yielding scope for lower and lower pricing. This approach is not creative destruction in our view, the fancy strategy a section of the Street believes Jio is implementing. So, where do we go from here? Would this battle of supremacy (reflected in Jio’s indicated market share target of 50% by FY2021) mean a sustained race to the bottom or would we see rationality emerge any time soon? We do not know and we do not know because knowing the answer to these questions needs us to know the one player in the industry we do not know well – Jio.